The Sugar Tax: sour news or a sweet opportunity for challenger brands?

Posted on 13/12/2016 · Posted in Blog, Food and Drink, Palm PR

Last week the UK government moved forward with its planned sugar tax, announcing the publication of draft legislation which confirms a two-band levy for sugar-added soft drinks in order to tackle down child obesity in the country. [1]

By this, Britain joins a group of countries like Belgium, France, Hungary and Mexico, that have already taken into effect this policy imposing a tax on drinks with added sugar, to deliver on their promises of a healthier society.

As well as announcing the new levy, it’s been predicted that UK producers will incur one-off costs of familiarisation with the new rules and training for staff and there will be on-going costs including completing, filing and paying quarterly returns, keeping appropriate records (including those required to claim the export credit), and amending returns.

Whilst the announcement is expected to be most significant for big brands and has already faced widespread opposition, market leaders such as Coca Cola and Britvic have already started innovating and adapting to this issue by increasing promotion of low and zero sugar products.  For example,  Coca Cola recently launched their latest product to the soft drink market, Honest Iced Tea, marking a new age for increased competition between brands by positioning the new release as a challenger brand to Britvic’s Lipton Iced Tea – proving that it is possible to adapt to regulations, remaining at the same time competitive.

The tax is expected to come into force in April 2018, giving industry leaders in the category time to reduce sugar in their products and, perhaps most inciteful for emerging brands, allow time for soft drink producers to develop NPD in alignment with the new legislation.

With an increased sugar levy on the horizon, there are already signs across the category that innovation and competition between brands will be hugely encouraged in the forthcoming year.  Healthy competition provides fantastic opportunity for brands to emerge with new challenger products and adaptations to their core offerings in compliance with the legislation.

Despite the tax being greeted with widespread concern, the opportunities it presents for increased innovation in the category and the introduction of a healthier, sugar-free landscape in the soft drink industry are plentiful.

 

[1] Britain publishes draft sugar tax – Reuters.com

http://uk.reuters.com/article/uk-britain-sugar-tax-idUKKBN13U1ME